Thoughts from a Venture Capitalist on Software, Software-as-a-Service (SaaS), Cloud Computing, Mobile, Internet and more

Thursday, May 15, 2008

Churchill Club 2008 Top 10 Tech Trends

I attended yesterday the 10th Annual Top Ten Tech Trends organized by the Churchill Club at the Fairmont Hotel in San Jose. This year, the panel included Steve Jurveston from DFJ, Vinod Khosla from Khosla Ventures, Josh Kopelman from First Round Capital, Roger McNamee from Elevation Partners and Joe Schoendorf from Accel. The panel was moderated by Tony Perkins, the Editor-in-chief of AlwaysOn. Unfortunately, John Doeer was not in the panel this year, but Tony said he could not believe anymore in John's forecasts after his support of Hillary's presidential campaign...

The top 10 trends this year were around the emergence of mobile platforms (thanks Apple for the iPhone!), the rise of CleanTech, and the next wave of web applications and services, with a hint to the potential of the baby boomers. It was a bit unfortunate though that 4 of the 10 trends focused on mobile computing and were somehow very close (one would say that all great minds converge, but the session had an air of "deja vu" each time a new mobile trend was unveiled. So without further dues, here is the list:

1) Demographics are destiny creating opportunity (Steve)Every 11 seconds a baby boomer turns 60 and they already represent a market of 75 million people today. Steve believes these baby boomers will become a large market of internet savvy people up for grab. One specific example: mental exercise is bound to become widespread as people spend 1/3 of their live in retirement Audience: 70 percent voted “Yes”

2) The device that used to be a phone will turn into a mainstream computer (Vinod)Vinod predicted that soon cell phones will have a projector inside to project the screen anywhere and turn a small square into a decent size visual interface. His time horizon: 2 year. The main obstacle highlighted by Roger against this trend was the quality of the wireless infrastructure in the US. Audience: 40 percent voted “Yes” (while people believed overall in the emergence of the platform, the projector example did not resonate well - may be because the audience was not composed mostly of baby boomers)

3) The rise of the implicit internet (Josh)This one deserves a bit of explanation. The idea is that all your personal data captured when you browse and transact on the web today is held in silos (Amazon, Netflix, Google...) but we have reached the inflection point when these silos will get connected. The next wave of internet will come from companies aggregating these various data sets and leveraging them to provide more value to the user. As Roger mentioned, privacy is going to be a key element of this evolution. Audience: 95 percent voted “Yes”

4) The mobile device industry migration from feature phones to smart phones will produce even greater disruption than what the PC industry experienced as it moved from character mode to graphical interfaces (Roger)This is very close to trend #2, the question here, as Vinod pointed out, is whether this is going to come or if the disruption has already started - which I would tend to believe. Audience: 75 percent voted “Yes”

5) Water tech will replace global warming as global priority (Joe)Here is the premise behind this trend: the world is running out of water and this will kill more people than global warming. 1B people do not have proper water today for their day to day needs and this number will jump to 3B in the coming years. This opens a large opportunity for water purification related technologies (in particular technologies to convert sea water into drinking water). While the point on water is very clear to me, I don't know if it supersedes the climate issue. Global warming, by accentuating drought and melting glaciers, will have a key impact on water resources distribution and will increase the unbalance. So, which one will have the greatest impact? One would hope that mankind will be smart enough and that this question will remain unanswered...80 percent voted “Yes”

7) Fossilizing fossil energy (Vinod)Biofuels will overcome oil, coal generated electricity will be replaced by solar energy. This will happen shortly (3-year horizon) as biofuels and solar energy production costs become cheaper than fossil fuels. With the oil barrel price moving from $20 in 2002 to $124 today, and cities like San Francisco in active discussion to build a 5-megawatt installation within the city limits, this prediction seems on its way - and was widely approved by the audience. Audience: 90 percent voted “Yes”

8) Venture capital 2.0 (Josh)For his first panel, Josh had a good trend and a more controversial one. His prediction: changing economics for start-ups and Venture Capital funds and changing markets will tumble the VC economy. This seems a bit far fetched to me. Yes, a lot of money has gone into the space recently and this will likely bring the median venture return down for a while, but that is part of the economic cycle of the industry. At the bottom of the cycle, lower amount of capital is raised, returns are increasing and this attracts new investors. At the top, there is too much capital, returns decrease and money goes elsewhere. So I don't see the breakthrough here.In addition to this economic cycle, the main driver for the Venture industry health is the pace of innovation and today, this pace is accelerating: with SaaS on the software side, cell phones turning into computing platforms on the telecom side, CleanTech on the energy side, or biotech on the healthcare side, it does not seem that entrepreneurs are short of ideas Audience: 40 percent voted “Yes”

9) Within five years everything that matters to you will be available on a device that fits on your belt or in your purse. This will cause a massive shift of internet traffic from pcs to smaller devices (Roger)Roger added that these devices will be used mostly to create content not access content (Apple got it wrong?). The panel response was mixed but it gave the opportunity to Vinod to place a memorable quote: "The best way to predict the future is to invent it" - very inspirational Audience: 30 percent voted “Yes”

10) 80% of the world population will carry a mobile device with internet access in 5-10 years (Joe)While the trend is clear, 80% seems a high number. According to his previous prediction, 3B people will have trouble to find drinking water in the coming years, so internet access might not be their #1 priority and the little energy they can access will likely be directed toward fulfilling this primary need - but who knows? Audience: 50 percent voted “Yes”

3 comments:

Anonymous
said...

Great article. Very informative. I particularly agree about the comment about how the informational halo silos will become integrated among each other. I might suggest a pretty awesome book for understanding the entrepreneurial code, "The Answer." http://www.readtheanswer.com/index.php?rta=blog

About me

Philippe Botteri, Accel Partners

French native, I have been working in the technology industry for more than 15 years, both in Europe and Silicon Valley. I started my career in 1998 helping large companies with McKinsey, before moving into venture capital in 2006. Some of my past investments include CornerstoneOnDemand(Nasdaq: CSOD), Eloqua (Nasdaq: ELOQ, acq. by Oracle),Criteo (Nasdaq: CRTO) and Bizo (Acq. by LinkedIn).

I moved back from Silicon Valley to London in 2011 to Join Accel Partners and focus on investments in Cloud Computing, Big Data, Security, Mobile and Online Marketplaces

Beyond technology, I like everything with a board on snow, water or land